The enemy within?

Here's the editorial for the April 2010 issue of JIPLP.

"The enemy within?"

From the outside and at a respectable distance, the economically intercommunicating territories of Europe look remarkably solid. Though the euro has not yet penetrated the entirety of the continent from which it takes its name, it is the official currency in 16 of the European Union's 27 Member States and is accepted de facto in most shops and markets throughout the rest. Common rules govern many aspects of daily European life and the impression is received that the path to European integration is open to traffic in one direction only. Fortress Europe from without, Eurovision Song Contest from within, a shared culture and a shared future look assured.

The IP community knows this is not an accurate depiction of reality. Linguistic diversity means that a single trade mark is inappropriate for all countries. It also now seems that the body that grants the single Community trade mark (CTM) is itself something of a hate-object for the national (in the case of Benelux, regional) trade mark granting offices. The success of the CTM system has it seems brought about a hostile reaction from its localized and geographically limited forebears.

That the Office for Harmonisation in the Internal Market (OHIM), which administers the CTM system, wishes to refund more than 300 million euros of excessive fees is a matter that has caused deep irritation among some national offices. Concern has been expressed that the popularity of the CTM with its users is the death-knell of national systems and that any overpaid fees should be deployed by way of subsidy so that the latter may remain viable. There is also resentment at the manner in which OHIM seeks to assert its pro-Community line in the face of opposition from the representatives of national offices who sit on its controlling committees. Like Gulliver in the hands of the Lilliputians, OHIM is constrained by whose individual strength is weak but whose collective position of power remains unassailable. If national offices can force OHIM to keep its fees high and to channel any residue towards their needs, the CTM system can be brought to its knees.

A further attack on the system has come from the position taken by the Benelux and Hungarian Offices that, for the purposes of ascertaining whether a CTM relied on in local opposition proceedings has been the subject of ‘genuine use’, use of a CTM in a single Member State of the European Union cannot be regarded as ‘genuine’. While this proposition is, I believe, wrong in law, it is at least a proposition which can be seriously argued and for which some support can be found. What is significant is not the fact that the issue of whether ‘genuine use’ of a CTM must involve a plurality of Member States has been raised; it was a question waiting to be asked and which, surprisingly, was left open by the legislators when the foundations of modern European trade mark were dug. The significance lies in the fact that the question is being asked now, the best part of 20 years since the Community system was concretized.

In the long term, the outcome of these little spats over the autonomy of national registries and the status of CTM use is assured. OHIM will eventually be governed centrally, from Brussels, and use of a CTM will be ‘genuine’ even if it is only in one Member State, so long as it conforms to the other criteria of use to which any mark is subject. The reason why these outcomes will prevail is that they are the only outcomes that are politically acceptable in a Europe which continues to grow closer, a Europe which is pressing for a Unified Patent Litigation System and which—love it or loathe it—will soon have one. So are national offices, and the national interests that cause them to raise their heads above the parapet, the enemy within? I think not. They may win some battles but they will lose the wars. Before they do so, however, they will have brought about at least one beneficial result: they will have forced their opponents to articulate their pan-Europeanism in terms which are more precise, more persuasive, and more complete than the hotchpotch of statements, recommendations, travaux, and decisions from which we must now seek to glean the pan-Europeanists' intentions.

Assessing pharma patent strength

JIPLP has received a draft article submitted by Jiejing Yao and Hui Peng and entitled "New Index System of the Strength of Pharmaceutical Patent and its Application". Both authors are doctoral candidates as the Tongji University, Shanghai.

According to its abstract,

"The article proposes a new index system of the strength of pharmaceutical patent protection which covers the aspects of legislation and executive. The index system consists of 11 categories and 37 sub-categories. The SPPP of China (1986-2009), 31 Chinese provinces (2007) and 27 countries and regions (2007) are calculated with the proposed index system, which are the empirical basic to make in-depth analysis on the status quo of pharmaceutical patent protection in sample countries and regions from horizontal and vertical aspects".

After some discussion, the editorial production team are still uncertain as to whether this is the sort of article they'd expect to find in JIPLP. We'd be pleased to receive your opinion as to whether you think it's appropriate for this journal, or whether it is either too theoretical or too remote from the core professional and commercial activities of readers. You can read the article in full here. Please email your opinion to me here.

Trade marks as an indicator of innovation

Trademarks as an Indicator of Product and Marketing Innovations, by Valentine Millot, is the title of the 46-page STI Working Paper 2009/06, published in April 2009 by the Organisation for Economic Co-operation and Development (OECD). According to the Abstract,

"Non-technological innovation is a major factor of competitiveness and productivity growth in the economy, notably in the service industries. However, the measurement of non-technological innovation and of innovation in the service industries is currently very poor, as traditional data sources like R&D or patents do not apply to these types of innovations. This document presents a strong candidate for quantifying non-technological innovation: trademark data.

Trademarks constitute a rich and easily accessible source of data. Besides, several studies have shown that they are highly correlated with various innovation variables (patents, share of innovative sales). Lastly, trademarks have a large perimeter of application; they are present in almost every sector of the economy. Trademark data are then likely to convey information on two key (overlapping) aspects of innovation that are not well covered by traditional indicators: innovation in the service sectors and marketing innovation.

This paper aims at presenting trademarks, their potential link with innovations and their main statistical properties, to see if they may actually serve as an innovation indicator".

I should be grateful if any reader of this weblog could volunteer to review it. If you'd like to do so, please email me here. The review can either take the form of a standard book review, or it can be expanded to a full-length article since the subject is such an interesting one.

Bundesgerichtshof decides in the Opel/Autec toy car case

Author: Dr Birgit Clark (Rechtsanwältin)

German Federal Supreme Court (Bundesgerichtshof), advance press release No. 9/10 of 15 January 2010 concerning case I ZR 88/08 (‘Opel-Blitz II’) of 14 January 2010.

Citation: Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq014

Applying the guidance provided by the European Court of Justice (ECJ) in Opel/Autec Case C-48/05, the Bundesgerichtshof has ruled that a car manufacturer cannot rely on its trade marks rights in order to prevent the marketing of toy model cars that are scale models of the original cars bearing the original car manufacturer's trade mark on the relevant space.

Legal Context

In similar manner to Article 5 of the Trade Mark Directive 2008/95 (formerly 89/104), section 14(2) of the German Trade Marks Act (MarkenG) provides that

third parties shall be prohibited from using in the course of trade, without the consent of the proprietor of the trade mark,
any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is protected;
any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, including the likelihood of association between the sign and the trade mark; or,
any sign which is identical with or similar to the trade mark in relation to goods or services which are not similar to those for which the trade mark is protected; where the trade mark has a reputation in the Federal Republic of Germany and where the use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of such trade mark.

Facts

The claimant, Adam Opel GmbH (Opel), was the proprietor of a device trade mark for the so-called ‘Opel-Blitz’ (in English: Opel Lightning), inter alia, covering motor vehicles and toys. Opel tried to prevent the distribution of toy cars manufactured by the defendant which were copies of Opel's Astra V8 Coupé car in a reduced scale. The defendant's toy cars included the Opel-Blitz device mark affixed to their grille.

While it was established that Opel had sold model cars through its dealer network and had a certain degree of reputation in such toys, it was also accepted the replica car market had existed in Germany for over a hundred years, since the end of the 19th century. The Court of First Instance, the Regional Court Nürnberg-Fürth, referred this matter to the ECJ for a preliminary ruling. In Case C-48/05, the ECJ ruled that ‘the affixing by a third party of a sign identical to a trade mark registered for toys to scale models of vehicles cannot be prohibited under Article 5(1)(a) of the Directive unless it affects or is liable to affect the functions of that trade mark’. In its decision, the ECJ further took the view that it was ‘ ... for the referring court to determine, by reference to the average consumer of toys in Germany, whether the use at issue in the main proceedings affects the functions of the Opel logo as a trade mark registered for toys.’ As such, it was up to the national court to ascertain whether the relevant German consumers would interpret the logo device affixed on the model toy as a reference to trade origin and wrongly believe that the model car was manufactured by (or an undertaking economically linked to) the claimant.

Analysis

In light of the ECJ decision, the Regional Court (Landgericht) Nürnberg-Fürth dismissed the claimant's action. The Nürnberg-Fürth court (case reference 4HK O 4480/04 of 11 May 2007) decided that the relevant consumer would regard the logo affixed on a scale model car's grille merely as ‘part of the model car’ and would not attribute the logo to the manufacturer of the original car in the sense of a reference of trade origin or believe that there was an economic link or a licence agreement in place between the toy car manufacturer and the manufacturer of the original car. This decision was upheld by the court of appeal (OLG Nürnberg, case reference 3 U 1240/07 of 29 April 2008).

In its 14 January 2010 decision, the Bundesgerichtshof confirmed this ruling, denying that there had been an infringement of the claimant's Opel-Blitz device mark under section 14(2) MarkenG.

The court found that the requirements of trade mark infringement under section 14(2)(1) MarkenG were met insofar as the affixing of the Opel-Blitz device mark on the defendant's toy car constituted use of a sign that was identical to the claimant's mark on identical goods (toys). However, in view of the Federal judges, this use did not affect the main function of the mark, which is indicating the trade origin of the goods (here, a toy car), nor did this use affect any other functions of the trade mark because the relevant consumer would merely regard the Opel-Blitz device affixed on the defendant's model car as an exact copy of the mark that the original car had affixed on exactly the same space. Consequently, the Opel-Bliz device would only be seen as a reproduction of a detail of the original car. The Bundesgerichtshof stressed that the relevant German consumers would not regard the mark affixed on a toy car as a reference to the trade origin of the toy car.

The court further took the view that insofar as the claimant's mark was registered for motor vehicles, the goods concerned (model cars and motor vehicles) were not similar so that there was no trade mark infringement under section 14 (2)(2) MarkenG based on a likelihood of confusion.

Finally, the judges found that there was also no infringement under section 14 (2)(3) MarkenG of a mark with a reputation because there was no unfair advantage taken of or detriment caused to the repute of the claimant's mark insofar as it was registered for motor vehicles.

Practical significance

The outcome of this eagerly awaited decision was not really much of a surprise, given the German consumers' perspective when it comes to model cars and bearing in mind that Germany's replica car market had existed since the beginnings of the automobile industry in the late 19th century. However, this case may have perhaps been decided differently in a different country, taking into account ‘local’ customs and views relating to (toy) cars. The following conclusion may be drawn from this judgment: to avoid a situation such as the one occurring in the German model car market whereby the relevant consumers do not necessarily associate a model car with the actual trade mark owner, trade mark owners may consider ‘educating’ consumers as to which merchandize producers are authorized to use their marks.

Exclusive jurisdiction clauses and anti-suit injunctions

Authors: David Wilson and Joanna Silver (Herbert Smith LLP)

Skype Technologies SA v Joltid Ltd & others [2009] EWHC 2783 (Ch), Lewison J, 6 November 2009 (Chancery Division, England and Wales)

Citation: Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq015

The High Court, England and Wales, considered whether to grant an anti-suit injunction to restrain US proceedings where an agreement between the parties contained an exclusive jurisdiction clause in favour of the English courts and proceedings in England had already been commenced. Lewison J assessed recent developments in the law relating to anti-suit injunctions and concluded that an anti-suit injunction, although a discretionary measure (which ECJ case law considers an interference with the jurisdiction of another court), was appropriate in this case.

Legal Context

Article 23(1) of Council Regulation (EC) No 44/2001 (the ‘Brussels Regulation’) provides:

If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise ...

Whether a dispute falls within an agreed jurisdiction clause is a question of interpretation of that clause and, even in the context of the Brussels Regulation, must be decided according to national law (Benincasa v Dentalkit Srl [1997] ETMR 447; Knorr-Bremse Systems for Commercial Vehicles Ltd v Haldex Brake Products GmbH [2008] FSR 30). The starting point when analysing jurisdiction clauses is an assumption that commercial parties agreeing such clauses intend that any disputes arising out of the relationship are to be decided in the same, agreed forum (Fiona Trust & Holding Corp v Privalov [2007] UKHL 40).

Further, where a court has jurisdiction under the Brussels Regulation (eg under Article 2, because the defendant is domiciled in that jurisdiction), discretionary considerations such as those relating to forum non conveniens (eg harm suffered in another jurisdiction or location of witnesses) cannot play a part in any decision about whether that jurisdiction should stay its proceedings (Owusu v Jackson [2005] QB 801). Also, a court with jurisdiction under the Brussels Regulation should not restrain a party from commencing or continuing proceedings before a court of another Member State; ECJ case law indicates that it is for each court to rule on whether it has jurisdiction to resolve the dispute before it (Turner v Grovit [2005] 1 AC 101; West Tankers Inc v Allianz SpA [2009] 3 WLR 696).

Facts

Skype, domiciled in Luxembourg, offered free-to-download software that enabled users to communicate over the internet. Joltid, a BVI company, owned certain software that was integral to Skype's business. Skype and Joltid entered into a written agreement, by which Joltid granted Skype a worldwide licence to use a form of its software, the object code, but retained sole control of the source code. Clause 19.1 of the licence stated:

Any claim arising under or relating to this Agreement shall be governed by the internal substantive laws of England and Wales and the parties submit to the exclusive jurisdiction of the English courts.

In March 2009 Joltid, claiming that Skype had breached the licence by using and accessing the source code, purported to terminate it. In response, Skype commenced proceedings in England, claiming that the purported termination was invalid and the licence remained in force. Skype accepted that it had used the source code, but denied this was a breach. According to Skype, Joltid had supplied the source code rather than the object code. This amounted to a variation of the licence. If not, Joltid was estopped from alleging breach or had waived the right to demand strict compliance. In response, Joltid sought a declaration that the licence was validly terminated, as well as an injunction and financial remedies.

Joltid subsequently registered its copyright in the source code in the USA and commenced proceedings in the USA against Skype and its various investors (which were not parties to the licence) for copyright infringement. Skype claimed that these US proceedings were in breach of clause 19.1 of the licence and sought an anti-suit injunction in the UK proceedings to restrain them.

Since Skype was domiciled in Luxembourg, Article 23(1) applies in relation to clause 19.1 of the licence. Lewison J began by assessing whether the claims against Skype in the US proceedings fell within the scope of clause 19.1. Joltid argued that its claims in the US proceedings did not arise out of the licence since they were predicated on the assumption that the licence had been terminated. Lewison J rejected this interpretation as unduly narrow. Interpretation of a jurisdiction clause is a matter of national law (Benincasa, Knorr-Bremse (supra)), and in Fiona Trust, Longmore LJ in the Court of Appeal, applauded by Lord Hoffmann in the House of Lords, stated that ‘the words "arising out of" should cover "every dispute except a dispute as to whether there was ever a contract at all"’. Lord Hoffmann added that clause construction should start from the assumption that commercial parties are likely to have intended that all disputes are to be decided by the same tribunal. Accordingly, Lewison J concluded that the US proceedings initiated by Joltid did relate to a dispute covered by clause 19.1.

The court then considered whether Skype was entitled to an anti-suit injunction to prevent any further steps being taken in the US proceedings. Lewison J began by agreeing with Skype that, following Owusu, the UK court should not decline to exercise its exclusive jurisdiction under Article 23(1) on the basis of discretionary considerations such as forum non conveniens and that the UK proceedings should not therefore be stayed in favour of the US proceedings.

Lewison J rejected Skype's argument that the tests for staying domestic proceedings and granting anti-suit injunctions were ‘two sides of the same coin’ and that it followed that, if the court could not stay its own proceedings, it must grant an anti-suit injunction. In Turner and West Tankers, the ECJ held that where proceedings are initiated in another Member State in breach of a jurisdiction or arbitration clause, a court should not grant an anti-suit injunction; it is for each court to rule on whether it has jurisdiction to resolve the dispute before it. Skype argued that this line of authority only applies where both jurisdictions are Member States, but Lewison J rejected this. He noted that Skype's argument that there was no discretion to stay the UK proceedings was founded on Owusu, where the ECJ drew no distinction between Member and non-Member States. Thus if Skype was right about this issue, the ECJ's approach to anti-suit injunctions must also be equally applicable in the case of non-Member States.

Nonetheless Lewison J concluded that, as a matter of discretion, an anti-suit injunction should be granted. Since there was no dispute that the licence was valid, even if terminated, there was a breach of clause 19.1 and the court would need a good reason before declining to enforce by injunction the parties' contractual bargain on jurisdiction. There was no such reason here. Lewison J considered that the standard forum non conveniens arguments prayed in aid by Joltid should be given little weight where, as here, the parties to an agreement of worldwide application deliberately agreed an exclusive jurisdiction clause appointing a neutral territory, and where such factors were eminently foreseeable when the parties entered into the licence. Otherwise, the clause would be deprived of its intended effect since, the more ‘neutral’ the forum chosen, the less importance the parties must have placed on its convenience for any particular dispute.

Another important factor was whether the grant or refusal of the injunction would enable all disputes between the parties to take place in a single forum. In this case, the court's decision either way could not avoid the risk of parallel proceedings; following Owusu, the court could not stay the UK proceedings, but it had no jurisdiction to restrain the US proceedings in respect of the parties that did not have the benefit of the exclusive jurisdiction clause.

Analysis

These proceedings afforded an opportunity to consider the availability of anti-suit injunctions against parallel proceedings in non-EU Member States.

As discussed in this judgment, the ECJ has held that an anti-suit injunction prohibiting a party from bringing proceedings in another Member State in breach of an exclusive jurisdiction or arbitration clause is an inadmissible interference with the jurisdiction of that court and inconsistent with the principles of mutual trust that underlie the Brussels Regulation (Turner, West Tankers). Although Lewison J did not explain why the court retained its discretion to grant an anti-suit injunction in this case, the decision is consistent with Shashoua v Sharma [2009] EWHC 957 (Comm), in which Cooke J held that West Tankers did not impact upon the use of anti-suit injunctions in relation to proceedings brought in non-Member States; West Tankers sought to ensure the uniform application of the Brussels Regulation and the ‘free movement’ of judgments across the EU, so did not apply to proceedings before a non-Member State court. Similarly, Lewison J exercised the court's discretion to grant an anti-suit injunction to restrain proceedings brought in a non-Member State. Accordingly, anti-suit injunctions remain available to restrain such proceedings in non-Member State courts.

Practical Significance

It is beneficial to both IP owners and licensees to have certainty as to where a dispute will be resolved or litigated, and to know that all disputes will be brought in the same jurisdiction; indeed, this is the purpose of an exclusive jurisdiction clause.

This case indicates that, at least where parallel proceedings are commenced in a non-EU Member State, the English courts are willing to enforce an exclusive jurisdiction clause by granting anti-suit injunctions where appropriate. In exercising the court's jurisdiction, Lewison J rejected arguments relating to forum non conveniens on the basis that it is eminently foreseeable to parties to a global licence agreement that whichever jurisdiction they choose, it may not be the most convenient for a particular dispute for at least one party.

However, as emphasized by the ECJ in Turner and West Tankers, under the Brussels Regulation it is for the courts in each EU Member State to rule on whether it has jurisdiction to resolve the dispute before it. This results in the availability of anti-suit injunctions to enforce an exclusive jurisdiction clause currently depending on where alternative proceedings are initiated.

Three IP books in search of a reviewer

The Journal of Intellectual Property Law and Practice (JIPLP) currently has a number of books for which it has not yet been able to secure reviewers who are prepared to write up an appraisal for publication in JIPLP itself. These books include the following titles:

* Outsourcing Agreements: A practical Guide by George Kimball (San Diego-based partner, IT/ Telecommunications Practice Group, Baker & McKenzie LLP in San Diego). Details of the book may be found here.

* An Associate's guide to the Practice of Copyright Law by Meaghan Hemmings Kent and Joshua J Kaufman (senior associate and partner, respectively, at Venable LLP). Details of the book may be found here.

* Intellectual Property Law and Practice of the United Arab Emirates by Peter W. Hansen (partner in the Dubai-based IP firm, Cedar White Bradley). Details of the book may be found here.

If you believe that you have an appropriate professional or commercial background and would like to offer your services as a reviewer, please email me here and let me know. The names of suitable candidates will be passed on to the Review Editor, Phillip Johnson. Don't be disappointed if you don't get asked to review the book which you have requested: reviewers' details will be kept on file and they will be borne in mind when future titles fall to be reviewed.

Reviews in review!

The Journal of Intellectual Property Law and Practice (JIPLP), like many other journals, carries reviews. These have not been limited to books alone but have embraced the occasional film, article, weblog and even advertisement. Some reviews are short and pithy, but others have been the length of full articles, depending on their importance or topicality. The review section, skilfully developed by Reviews Editor Phillip Johnson since the journal's inception in 2005, is respected for its sagacity, its variety and its integrity.

As part of its ongoing policy of listening to readers' comments and seeking to match their interests, JIPLP would like to hear from you on the following issues:

(i) are you happy with the proportion of JIPLP which is dedicated to reviews?

(ii) do you think that reviews should be made more current by appearing online, on the JIPLP website or on this weblog, rather than (or as well as) appearing in print at a later date?

(iii) do think that the range of items which JIPLP reviews is too broad, too narrow or just right?

(iv) do you have any other ideas for enhancing the review section?

(v) would you be interested in writing a review, should an appropriate opportunity arise?

Please get in touch by emailing here, with the subject line "JIPLP Reviews".

Paediatric extension applications: substance and timing

Authors: Sebastian Moore and Jonathan Turnbull (Herbert Smith)

EI Du Pont Nemours & Co. v United Kingdom Intellectual Property Office [2009] EWCA Civ 966, 17 September 2009

Citation: Journal of Intellectual Property Law & Practice 2010 5(3):134-136; doi:10.1093/jiplp/jpp211

The Court of Appeal for England and Wales provides the first clear guidance on the timing and substantive requirements for applying for and obtaining a paediatric extension to an existing Supplementary Protection Certificate (‘SPC’).

Facts

On 18 February 2009, DuPont applied for a 6-month paediatric extension to its existing SPC for the hypertension drug losartan, which is marketed as Cozaar by its licensee Merck. The United Kingdom's Intellectual Property Office (‘IPO’) Hearing Officer refused the application on 9 April 2009 and this refusal was upheld in May 2009 on appeal to the High Court (John Baldwin QC sitting as a Deputy Judge). Following the High Court's decision, DuPont requested an expedited appeal as it was unclear whether a paediatric extension could be granted if the underlying SPC had expired before the appeal was heard. Consequently, on 19 August 2009, Lord Justices Jacob, Ward and Stanley Burnton heard DuPont's appeal during the Court's vacation. In its written judgment of 17 September 2009, the Court of Appeal agreed with the IPO and the High Court that the conditions for granting the paediatric extension had not been met in DuPont's application but disagreed with the decision that the application could not be rectified.

Legal Context

DuPont was unable to obtain a varied marketing authorization (‘MA’) by the deadline for filing its paediatric extension application (currently 6 months prior to expiry of its SPC under the transitional provisions of Articles 7(4) and 7(5) of the SPC Regulations, Regulation 1768/1992, now replaced by a codified version 469/2009). This was because the administrative procedures for varying the MA had not been completed in time for reasons outside DuPont's control.

The Hearing Officer rejected DuPont's application as it was not made in accordance with the SPC Regulations and because it did not fulfil the substantive requirements of the Paediatric Regulations (Regulation 1901/2006). The Court of Appeal summarized the alleged deficiencies in DuPont's application as being that it did not include:

1. an MA containing a statement of compliance with the agreed paediatric investigation plan (‘PIP’) (in accordance with Article 28(3) of the Paediatric Regulations); and

2. proof that varied MAs containing a statement of compliance had been obtained in each Member State, as required by Article 36(3) of the Paediatric Regulations, following DuPont's use of the mutual recognition procedure to vary its MAs.

Further, both the Hearing Officer and the High Court held that the IPO was not required to provide DuPont with further time under Article 10(3) of the SPC Regulations to correct the application's deficiencies. This was because the Hearing Officer and the High Court interpreted narrowly the term ‘irregularity' in Article 10(3) of the SPC Regulations, which excluded deficiencies that were incapable of being rectified at the time the application was made.

Analysis

In order to obtain a paediatric extension, an applicant must comply with Articles 7 and 8 of the SPC Regulations, which set out the timing for filing a paediatric extension application and the requirements for the content of that application. Article 8 in turn cross-refers to Article 36 of the Paediatric Regulations which itself cross-refers not only to other provisions of the Paediatric Regulations but also to Directive 2001/83 (which deals with the MA system). This has led to confusion underlined by Jacob LJ's leading judgment, in which he stated: ‘All this cross-referring and sub- and sub-sub- cross-referencing begins to make the mind boggle'.

In untangling the myriad of cross-referencing and to determine the underlying requirements of Article 8 of the SPC Regulations, Jacob LJ considered the objective of the Paediatric Regulations in providing the reward of a paediatric extension to an SPC. In agreement with the submissions of the IPO, he held that the aims and objectives are:

• to facilitate the development and accessibility of medicinal products for use in the paediatric population;
• to ensure that medicinal products used to treat the paediatric population are subject to ethical research of high quality and are appropriately authorized for use in the paediatric population; and
• to improve the information available on the use of medicinal products in the various paediatric populations.

Consequently, when considering the Paediatric Regulations as a whole, Article 36 should be interpreted as meaning that in order to obtain a paediatric extension:

• all the measures in the agreed PIP must have been compiled with;
• the authorized product information must include relevant information on the results of the paediatric studies (including the Summary of Product Characteristics); and
• the product must be authorized in all Member States.

Jacob LJ concluded that to fulfil the requirements of the Paediatric Regulations, a varied MA containing a statement of compliance with the agreed PIP (in accordance with Article 28(3) of the Paediatric Regulation) must be obtained. Jacob LJ suggested that this would promote a transparent system for granting paediatric extensions such that ‘all a Patent Office has to do is to look at the MA to see whether the PIP has been complied with'. Although DuPont argued that the results of the paediatric studies could be disseminated in other ways, such that a paediatric extension could be granted even if a varied MA had not been obtained, Jacob LJ was not convinced by these alternative methods. In summarizing his views, Jacob LJ stated ‘in the end it is what is on and in the packet which counts. And that is not determined finally until the MA is settled'. Further, unless the centralized procedure was used to obtain and vary the MA, varied MAs must also be obtained in each Member State, so that the results of the paediatric studies are available throughout the European Community.

To this extent, the Court of Appeal is in agreement with the decisions of the Hearing Officer and the High Court that strict compliance with Article 36 of the Paediatric Regulations is required to obtain a paediatric extension. The Court of Appeal, however, held that strict compliance was required on grant of the reward and, importantly, that the requirements of Articles 7 and 8 of the SPC Regulations did not state that the requirements of Article 36 of the Paediatric Regulations must have been completed at the time of filing an application for a paediatric extension. Consequently, if applicants submit their applications for a paediatric extension within the time required by Article 7 of the SPC Regulations but are unable to provide a copy of the varied MA or evidence that varied MAs have been obtained in every Member State (as required by Article 8(1)(d) of the SPC Regulations), the IPO must, in accordance with Article 10(3) of the SPC Regulations, ask the applicant to rectify its application within a stated period of time. The Court of Appeal rejected the Hearing Officer's and High Court's narrow interpretation of Article 10(3) of the SPC Regulations stating that there was no support for such an interpretation in the SPC Regulations: the reward of a paediatric extension is for complying with the agreed PIP and obtaining the necessary varied MAs, it is not for doing all that before the application is made.

Although not in issue in the DuPont case, Jacob LJ indicated that the IPO should take into account all relevant factors when considering the amount of time the IPO should provide to an applicant to rectify its application under Article 10(3) of the SPC Regulations. The relevant factors include the reason for the failure to include the required documentation and the date on which compliance could be expected and, the delay by and the conduct of the applicant.

Practical Significance


Although Jacob LJ acknowledged the different approaches of various Member States to grant DuPont's paediatric extension for losartan, the Court of Appeal's decision brings the position in the UK closer to the approach of the Dutch Courts. This decision has clarified the requirements for obtaining a paediatric extension in the UK and these requirements are now reflected in the sections concerning paediatric extensions in the recently reissued SPC ‘Guide For Applicants’ of the IPO. Further, the broad interpretation of Article 10(3) of the SPC Regulations has mitigated what appeared to be a harsh result in which an applicant could be prevented from obtaining a paediatric extension to an existing SPC due to a delay on the part of a regulatory authority in completing the relevant administrative procedures and through no fault of its own. In such circumstances, unless it has behaved unreasonably, an applicant should now be granted sufficient time to rectify its application and obtain a paediatric extension.

"Good business, shame about the lawyering"

Subscribers to the Journal of Intellectual Property Law & Practice (JIPLP) will be pleased to know that the March 2010 issue is available online (you can view the contents of this issue here). The Editorial, "Good business, shame about the lawyering", is a bit of a rant against the rush to sign off IP-driven licence agreements, which leaves it to subsequent litigation to iron out the legal creases and/or to deal with the consequence of the failure of a party know what to watch for once the ink is dry. The Editorial reads as follows:

"In recent weeks, I have become increasingly concerned at the content of some of the legal disputes coming before the courts, both in my home jurisdiction of England and Wales and more widely in Europe. I suspect that the same malady will be found elsewhere, but I shall content myself with the local evidence of its existence.

These disputes typically involve the licence of one or more high-profile trade marks, whether for the purpose of manufacturing under the licence or the promotional purposes such as sponsorship. A deal is struck, for licensee acts upon it and then, somehow, at a later stage, it appears that things have gone out of control. At that point, the parties get back to the contract and suddenly it appears that its terms either never did correspond to the business expectations and needs of the parties or, having originally done so, remained obdurately fixed while the business to which they relate underwent some form of change.

I have on each occasion commented to colleagues along one of the two lines: I have asked either (i) how it was that the businesses in question could have been persuaded to sign contracts for the use of IP which were clearly deficient in content or which failed to capture the true intent of the transaction or (ii) how it came to pass that, once the contract was signed, one or both parties neglected to look at its terms. The general response which I receive to these questions is that there is a business imperative which requires that the document be signed and the deal be done and that if lawyers were instructed to draft the document which perfectly summarized the nature of the deal and the intention of the parties, no deal would ever be done—and once the deal is done, it is up to the parties to decide whether to look at the contract or not.

There is of course more than a grain of truth in this. Businessmen cannot be expected to appreciate the almost aesthetic quest for the perfect trade mark licence for which their legal advisers may hold a desire. However, we are not talking about insignificant brands and trivial businesses. Intellectual property such as the trade marks DIESEL, UMBRO, ETIHAD, and LONSDALE have all been at the heart of complex and costly litigation over accidents that should never have been allowed to happen. If it is the lack of a legal budget which forces parties to run the risks of poorly drafted or poorly conceived contract drafts, which accurately record woefully bad business judgment or which are signed, sealed, and then ignored till it is too late, it seems that a budget is always conjured up for the litigation which resolves these problem issues, not to mention the cost of an appeal or a reference of a preliminary issue of law to the European Court of Justice.

So what can be done to rectify the situation? Not a lot, one might say, in a world in which business is driven by factors quite unrelated to the quality of an IP licence: currency fluctuations, shifts in fashion or popular style, cash fluidity, seasonal markets, and so on. Even so, there are some suggestions that can be cheaply and easily adopted in most cases. For example, for the avoidance of doubt, every IP licence should expressly state—whether it is provided in local law or not, since the parties may not know the local law and therefore ignore it:

• Whether a sublicence may be granted and whether the IP licensor has any say over the choice of sublicensee;
• Which law governs the contract and which country's courts will hear disputes arising from it;
• Whether it makes any difference if the licensor or licensee ceases trading, goes bankrupt, or undergoes a change of control;
• What factors entitle either party to terminate the licence—and how they do so;
• Whether the licence can be extended or renewed, and on what terms.

These are all such basic things that no IP licence should ever be without them, and wise and experienced readers of this journal will have far longer checklists of their own. However, if the parties can be advised that there are matters, such as these, which do end up in court if they are not dealt with, they might be more sensitive to the importance of listening to respectable legal advice on other licence terms too".